How loan modifications affect credit scores
Abstract: Homeowners who receive loan modifications and successfully avoid foreclosure may face another issue, one that is not well understood. It turns out that participation in loan-modification programs may adversely affect credit scores. 1 The magnitude of the impact is unclear because many factors affect what lenders will report about borrowers who seek modifications, and other factors affect how much the credit-reporting agencies, credit-score providers, and lenders will penalize borrowers who have loan modifications on their credit reports. Although both the U.S. Treasury and credit-scoring agencies have tried to clarify the issue, the outcome is still murky.
File(s): File format is application/pdf http://www.bostonfed.org/commdev/c&b/2010/fall/Chakrabarti_loan_modification.pdf
Provider: Federal Reserve Bank of Boston
Part of Series: Communities and Banking
Publication Date: 2010